Medicare Part C is strictly voluntary. It is the official name for the program we now know as Medicare Advantage. Medicare Part C plans provide you an alternative to traditional Medicare. Not everyone will feel like Part C is the best fit for them. It is important to understand how this plan works before you pay attention to all of this $0 premium commercials.
Medicare Part C Plans?
Medicare Part C plans are private Medicare plans which pay instead of Medicare. Think of Medicare Advantage plans as a package where you will have Part A, Part B and usually Part D together in one plan, through a private insurance carrier. An all-one ID card that you use at hospital, doctor’s office and pharmacy. Most Advantage plans include a built-in Part D drug plan, although in some areas you can find them without Part D.
Medicare C plans resemble group insurance benefits you may have had through former employers. Generally, there is a local network of providers that you will use. You will pay copays for many routine services like doctor’s visits, lab-work, ambulance, surgeries, hospital stays, urgent care and more.
How Much Will Medicare Part C Cost?
Medicare Part C plans generally have lower premiums than Medigap plans. This is because you are agreeing to treat in the plan’s network and pay copays as you go. The network may be an HMO network, where you’ll need to choose a primary care physician and get referrals.
Depending on your area, there may be Medicare PPO and Medicare PFFS options, which have some out of network benefits. Your out of pocket will include deductibles, copays and coinsurance up to the plan’s out of pocket maximum.
Some Medicare Part C plans have premiums as low as $0. This does not mean that Medicare Part C is free. When you enroll in a Medicare Part C Advantage plan, Medicare pays a fixed monthly sum to the insurance carrier to provide your care. The Medicare Part C company will offer you a monthly premium as low as possible to attract you to their plan. Remember, free isn’t free.
The premiums, copays, benefits, and drug formulary can and do change from year to year. This is because the Medicare Part C plan must renew its contract with Medicare annually.
Medicare Advantage Out-of-Pocket Maximums
Every Medicare Part C plan must have an out-of-pocket maximum to protect you. Medicare sets the highest allowable amount for this OOP maximum each year. The Medicare Part C OOP in 2021 is $7,550. This means that the most you will spend on that plan for Part A and B services is $7,550. (Part D spending is separate.) You will find many Part C Medicare plans that match this, but plans can also set a lower OOP maximum.
When reviewing a potential Medicare Part C plan, look at the OOP maximum on that plan. If you have a year of bad health with lots of spending on copays and coinsurance, do you have enough set aside in a rainy-day savings fund to meet that maximum? If not, find a plan with a lower out of pocket maximum, or choose Medigap, which has far less spending on the back end.
It is important to compare the difference between Original Medicare vs Medicare Advantage plans. Original Medicare does not have any OOP maximum to protect you. You could pay that 20% forever. So, if you cannot afford the more comprehensive Medigap plans, then a Medicare Part C plan at least has an OOP cap to protect you. For many folks, this makes Medicare Part C coverage a more attractive option that Original Medicare alone.
Medicare Part C Eligibility
Any Medicare beneficiary, regardless of age, can purchase a plan if they meet these criteria:
You must be enrolled in both Medicare Part A and B. Many people mistakenly think they can drop Part B if they enroll in a Medicare Part C plan. This is NOT the case. If you drop Part B, you will immediately be kicked out of your Part C plan. You must choose a plan that is in your service area and operates in that same county.
Medicare Advantage plans have election periods. This means that you can enroll during your Initial Enrollment Period or during the Annual Election Period in the fall. Under certain circumstances that qualify you for a Special Enrollment Period, like:
■ You move.
■ You’re eligible for Medicaid.
■ You qualify for Extra Help with Medicare drug costs.
■ You’re getting care in an institution, like a skilled nursing facility or long‑term care hospital.
■ You want to switch to a plan with a 5-star overall quality rating. Quality ratings are available on Medicare.gov.
What Does Medicare Part C Cover?
Medicare Part C covers all of the same Part A and B services that you get from Medicare. You will have both in-patient hospital and outpatient benefits. However, instead of paying deductibles and 20% of your medical services, you will pay the plan’s copays.
In the Medicare Advantage summary of benefits, it will list various medical services. The summary will show you what your copay or coinsurance will be for each service. Some items might have a $0 copay. That means you will have no copay for that service. The highest amount that you will pay in the network for any service is 20%. We typically see a 20% coinsurance requirement for things like durable medical equipment, dialysis, chemotherapy and radiation in many plans. Review your summary of benefits carefully to see what you can expect to pay for these and other items.
Remember, other than a monthly premium, everything you spend on Part A and B services counts toward your out-of-pocket maximum. If you hit that maximum, your Part C plan will pay 100% of approved services after that for the rest of the year. Many Medicare Part C plans often include a built-in Part D drug plan.
Medicare Part C Enrollment Periods
Unlike Medigap policies, you can only enroll into or dis-enroll from a Part C Medicare plan during certain periods. You can enroll in a plan during your Initial Enrollment Period when you first get Part B. You can also change during the Annual Election Period each fall, which runs from October 15 – December 7th, with your benefits beginning January 1st.
Medicare set up The Annual Election Period for Medicare Part C or Part D, because carriers are allowed to change their plans each year. They are allowed every year the option to change your plan’s benefits, formulary, provider and pharmacy network, premium and/or co-payments and co-insurance. If you don’t like those changes, Medicare allows you the option to change the type of plan you have.
